Broadband, TV and phone firms must warn customers their contracts are ending and offer them better deals, under new rules
- Telecoms firms must also tell customers what the best deals available are
- New rules from Ofcom means customers could save 20% on their bills
- Firms will have between 10 and 40 days to warn customers before contract ends
Broadband, TV, mobile and home phone firms will have to tell their customers when their contracts are coming to end – and alert them to the best deals, under a new Ofcom ruling.
The move, the latest in the regulator’s Fairness for Customers programme, means up to 20 million customers could save up to a fifth on the cost of their bills, according to research by Ofcom.
It found that people who bundle their landline and broadband services together pay on average 20 per cent more when they are out of contract.
This figure rises to 26 per cent among customers who bundle in their pay TV services with the two services.
Under new Ofcom rules, customers must be warned when a contract is coming to an end
Under the new rules, providers will have to send tailored information to millions of individual customers, including the contract end date, the price before this date, any proposed changes and the best deals they offer currently to customers.
Telecoms and pay TV firms will have between 10 and 40 days to warn customers before their contract comes to an end.
The alerts will be sent by text, email or letter – similar to other sectors such as insurance and energy suppliers.
Customers that choose not to move to another package will need to be reminded they can still do so on a yearly basis.
Ofcom’s consumer group director, Lindsey Fussell, said: ‘We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it.
‘This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.’
Ofcom added that, according to their research, about 14 per cent do not know whether they are still tied to their original deal.
A further 12 per cent believe they are ‘in contract’ but don’t know when this period ends.
Rules: Up to 20million customers could save up to a fifth on the cost of their telecoms bills
The new rules won’t come into force until February 15 next year, giving companies nine months to make the necessary changes to their systems and processes in order to make sure they ‘get this right’.
Richard Neudegg, head of regulation at uSwitch, said: ‘Ofcom is finally moving the telecoms sector towards what consumers have come to expect in other areas such as energy and insurance, which constitutes overdue but welcome progress.
‘While it has been a long time coming, this is an important step by the regulator to address what has long been a clearly unacceptable gap in the rules, penalising consumers to the tune of millions.
‘Customers should start seeing these notifications from February next year but consumers currently paying over the odds while sitting out of contract shouldn’t wait to act.
‘There are savings to be had and in some cases you can even pay less for a quicker or better service.’
Ofcom first announced its plans to help customers secure better deals at the end of contracts in a report in July 2018.
Given the scale of the loyalty penalty, this won’t be enough to solve the problem
Gillian Guy, Citizens Advice
Whilst the move was welcomed by many, Citizens Advice responded by saying the watchdog’s measures did not go far enough and more change was needed to ‘solve the problem’.
Gillian Guy, chief executive of Citizens Advice, said: ‘We are encouraged that Ofcom will make companies send a reminder to their customers when their contract is about to end. But, given the scale of the loyalty penalty, this won’t be enough to solve the problem.
‘Almost nine in 10 people think that charging loyal customers more is unfair, and we agree. We look forward to hearing about the concrete actions Ofcom will take to end this systematic scam.’
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